What is a Forbearance?

With a Forbearance, you and your mortgage company agree to temporarily suspend or reduce your monthly mortgage payments for a specific time frame. Forbearance allows you to combat your short-term financial problems by giving you time to get back on your feet and bring your mortgage up to date.

Forbearance might be an option if you are:

• – You are experiencing a temporary hardship
• – You are on the verge of missing payments or you’re behind on your mortgage payments

What are the benefits of a Forbearance?

• – It lowers or temporarily suspends your monthly payment, giving you time to improve your financial circumsances and get back on your feet
• – It’s less damaging to your credit score than a foreclosure
• – It can allow you to stay in your home and avoid foreclosure

How does a Forbearance work?

• Forbearance either reduces your monthly mortgage payment, or suspends it completely, during the forbearance period. If you are eligible for forbearance, you and your mortgage company will review the forbearance terms:
• – Reduced payment amount (if the payment is not suspended),
• – Length of Forbearance period,
• – Terms of repayment.
• Once the Forbearance period has ended, you will need to repay the amount that was suspended or reduced. However, there are a few options available if you are eligible: make a one-time payment for the amount due (reinstatement); add a certain amount to your payments each month until the entire amount is repaid (see Repayment Plan); or cure the past due amount through a modification.

Next steps

Step 1

Collect your financial information; be sure to have all your basic financial and loan information on hand when you call your mortgage company. You will need to have:

• – Your mortgage statements, as well as any information on a second mortgage, if you have one;
• – Your other monthly debt payments (ex. credit card payments, car or student loans);
• – Your income details (income tax returns and paystubs).

Step 2

Explain your current situation. Be prepared to describe your current hardship and explain why you are having trouble bringing your loan up to date, and whether this is a short-term or long-term issue. Your mortgage company will need to have a clear understanding of the reasons why you are having difficulty in order to find the right solution for you.

Step 3

Contact a mortgage company and tell them that you are interested in a Forbearance and you want to see if you are eligible.